Valeant Pharmaceuticals (VRX) in free-fall

• Hedge fund manager Bill Ackman, owned a whopping 19.47 million Valeant shares as of the end of June. That was 5.7% of the company. Another investment advisory firm called Ruanne, Cunniff & Goldfarb, which runs the $8.1 billion Sequoia Fund, owned 33.88 million shares. That was 9.9% of the float.

The biotechnology firm was already under political pressure due to its strategy of buying up competitors, then dramatically hiking prices for the drugs those firms sold. Federal and state prosecutors recently subpoenaed the company, looking for information on its drug distribution and pricing strategies.

Then today, Valeant shares plunged a whopping $28.13, or 19%, after a leading short-selling research firm questioned the firm’s sales practices. Specifically, Citron Research zeroed in on a relationship Valeant allegedly has with a specialty pharmacy.

It said Valeant improperly boosted its own sales by dumping too much inventory on a company called Philidor RX Services. Citron also noted that the websites of several other pharmacies bear a striking similarity to Philidor’s, something it said could imply that Valeant has been stuffing inventory elsewhere.

Citron even went so far as to ask: “Is this Enron part deux?” That caused Valeant’s shares to plunge so far, they were ultimately halted.

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